Introduction

One of the advantages of class actions is that they enable the individual claimant (eg a consumer) to have his or her case tried before a court together with the class, although the indi-vidual claim might not be significant enough to make it worthwhile considering costs etc.

The individual claimant is, however, often not aware of the possibility of a class action, in particular considering that the individual claim, in a legal claims context, is relatively insignif-icant. In addition, the individual claimant may not be aware that there is a vast group of con-sumers facing the same issue. The exponential increase in the use of social media during recent years will certainly have a direct impact on the popularity (and thereby the availability) of class actions in the future. Social media enable relevant individuals instantly to spread in-formation about a class action knowingly, or even inadvertently, and to establish contact with other potential claimants.

As a practical example: If a corporation markets and sells one or more specific baby products, which contain a component that turns out to be toxic the individual parents will be able to link up quickly with other affected families and assess the extent and severity of the damage caused.

Consequently, the use of social media is expected to increase significantly the possibility of groups to consider filing (and to be able to file) a class action law suit with the courts.

Based on recent case law regarding class action law suits in Denmark, it is likely that class actions going forward will continue to be based solely on claims raised against large corpora-tions. It is expected that claims will primarily be brought by investors relating to investments made in large publicly listed companies and/or consumers regarding specific products pur-chased from large corporations. Both the companies and their board and management may in these instances be held liable for economic loss, personal injury etc.

Liability generally assumes negligent acts or omissions on part of the company or its board and/or management. Relevant areas include, in particular, liability for wrongful or misleading information in a prospectus, liability for act or omissions in connection with bankruptcy and liability related to faulty and/or harmful products.

Denmark adopted its class action scheme in 2006 in the Danish Administration of Justice Act (chapter 23a). According to these rules “similar claims” may be filed with the Danish courts as a class action on behalf of a group of people or legal entities when the following cumulative conditions are met:

the claims must be “similar”

Denmark must be the right venue for all the claims

the specific court must be the right venue in Denmark for one of the claims (both in terms of geography and the subject-matter)

the court must consider that the class action procedure is the most appropriate one for the claims in question

the group members must be properly identified and informed during the court proceedings, and

the group must appoint a group representative.

The condition allowing the court to assess whether the class action procedure is the most appropriate is intended to prevent groundless actions. There are no general restrictions for the possibility of bringing a class action before the court.

There is no special court or jury dealing specifically with class actions, and class actions are governed by the same rules as other court cases with respect to evidence, witnesses, and procedural measures.

The group representative may either be a member of the class, a private association or a public authority (eg the consumer ombudsman). In most cases, the group representative is an association established for the specific purpose of being the group representative.

Class actions in Denmark are typically opt-in, i.e. members must affirmatively opt in to the case in order to join the class action group. However, in certain cases, when an opt-out class action is more appropriate from a practical point of view, the Danish Administration of Justice Act makes this a possible option. An example could be the consumer ombudsman acting as group representative for a large group of customers who has each been charged a small fee wrongfully by their telephone company.

As a general rule, all court hearings are public but there is no official and systematic way of monitoring class actions in Denmark

Settlements

The role as group representative does not imply a power of attorney to enter into settlements on behalf of all the members. Therefore, the group representative must obtain a power of attorney from the group members, or the explicit approval from each member, of a settlement proposal. Any settlement entered into between the group representative and the counterpart must be approved by the court in order to be valid. The court approves the settlement, if the settlement does not discriminate among the class action members and the settlement is not obviously unfair.

Relief and assessment of damages

There are no limitations as to what types of relief that may be requested in a class action compared to other court cases. The types of relief sought may be declarations or levying executions (eg claims for damages etc.).

Class actions are treated the same way as other court cases as regards assessment of damages. As a general rule, the Danish law of torts requires that the damages awarded equal the exact loss suffered, and that one must document such a loss in order to be entitled to damages. Denmark does not operate with punitive damages, except in a very limited number of cases.

There is no special mechanism for the distribution of settlement amounts or damages awarded by the court among members of the class. In the absence of any specific agreement between the members of the class and the class representative, the class representative is not entitled to receive any compensation awarded to the class. It is, consequently, up to each member of the class to initiate collection from the defendant of any compensation or damages awarded.

Types of collective redress

According to the Danish Administration of Justice Act (chapter 23a) “similar claims” may be filed with the Danish courts as a class action on behalf of a group of people or legal entities when the following cumulative conditions are met:

the claims must be “similar”

Denmark must be the right venue for all the claims

the specific court must be the right venue in Denmark for one of the claims (both in terms of geography and the subject-matter)

the court must consider that the class action procedure is the most appropriate one for the claims in question the group members must be properly identified and informed during the court proceedings, and

the group must appoint a group representative.

There are no special procedures, courts or juries dependent on the nature of the dispute which is the subject of the class action (eg competition law, consumer actions etc.) Class actions are thus subject to the usual Danish procedural rules.

Funding and costs

How are collective actions funded?

The court fee for filing a class action is calculated as a base fee to which a percentage of the total claim amount is added. This is similar to the manner by which the court fees are calculated in other court cases.

There are no mechanisms as to how the court fee is collected from members of the class, and it is therefore up to the group itself or the group representative to coordinate the collection and submission of the court fee.

Regarding the legal costs resulting from the court case, the court may decide that the group representative provides security for legal costs specified by the court. The court may, furthermore, decide that joining the class action is conditional upon each individual member also providing security for legal costs specified by the court, unless the member has legal aid insurance or other insurance which covers the costs of the case, or the class action fulfils the terms for free legal aid under sections 327-329 of the Administration of Justice Act and the member fulfils the financial conditions under section 325 of the Act.

The group representative is liable for legal costs, if any, awarded to the defendant. The individual group members are in turn liable for (the specific member’s part of) the loss incurred by the group representative by paying legal costs to the defendant.

Lately, foreign equity funds and insurance companies have been showing interest in funding litigation in Denmark in return for receiving a share of any damages awarded at the end of the case. Although this is not prevented by law, it is still a rare phenomenon in Denmark.

General costs rules in Denmark

As a general rule, the winning party will be awarded costs to be paid by the losing party. The costs awarded will amount to what the court considers reasonable in order to cover the winning party’s costs and expenses. The result is, generally, that the costs will fully cover expenses such as expert witnesses and expert opinions, but will not fully cover the winning party’s legal expenses, as the rates fixed by the court in this regard are rather conservative.

There is no specific mechanism for the distribution among the group members of any legal costs awarded. Legal costs are awarded to the group representative, who in turn will distribute the awarded costs amongst the members.

Recent developments, trends and predictions

The development of class actions in Denmark

The class action procedure was only introduced in 2006, therefore Denmark does not have a long tradition of class actions. As the rules concerning class actions are relatively new, we do not foresee that there will be changes to the procedures and rules for class actions in Denmark in the near future.

Although there appear to be no obstacles to the use or popularity of class actions, as the class action scheme was only adopted in 2006, the lack of actual long-time experience – both within the courts and with the lawyers as well as the general population – may mean that the option of class actions risks being overlooked.

In recent years, however, Denmark has seen the increasing use of class actions. Examples are collective shareholder actions regarding prospectus liability (Bank Trelleborg A/S, Vestas A/S, Pandora A/S, and O.W. Bunker A/S) and collective damages actions against the State of Denmark in relation to the implementation of the new digital land charges registration system in 2009.

The increasing number of class actions in Denmark in recent years may indicate that the involved parties (courts, lawyers and the general population) are becoming increasingly aware of, and looking favourably on, the option of class actions. The reason for this may be the advantages that the option of class actions provides. One of the advantages is that the members are able to have their individual claims brought jointly before the court, in situations where their individual claims might not be of a sufficient size to make them economically viable in their own right, as they would bear all the risk and expenses. In a class action, however, the risk and expenses are divided among the members.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

Practical scenario

For a brief summary of the main causes of (collective) action in your jurisdiction, see our practical scenario.